© VERBUND AG, · disruption management, black-start capability etc. • Intraday trading : Use of short-term volatility within one day to generate additional profits • Capacity/cold

© VERBUND AG, www.verbund.com


VERBUND Full year results 2015

Vienna


Full year results 2015

Page 3


At a glance

Influencing factors

• Water supply 7% below long-term average and 9%-points below FY2014, decreased production from annual storage reservoirs (–7.2%)

• Reduction of average achieved contract prices from 39.1 to 35.1 €/MWh (–10,3% vs. 2014)

• Restructuring of thermal power plants successfully continued

• Significant one-offs (impairments Mellach & Romania, reversal of impairments Albania, reversal of provisions in the grid sector, reversal of provisions for thermal restructuring and bond buyback)

• Additional income from control energy and sale of congestion management services

• Programme to reduce costs and increase efficiency 2013-2015 with savings of €177m completed (versus €130m target)

Results and cash flows

• EBITDA €888.7m (+9.9%); Adjusted EBITDA €838.8m (–5.7%)

• Group result €207.7m (+64.7%); Adjusted Group result €268.9m (+24.5%)

• Operating cash flow €674.0m (–6.1%); Free cash flow after dividend €392.7m (2014: €–133.6m)

Dividend 2015

• Dividend proposal 2015: €0.35/share (+20.7%)

• Pay-out ratio of 58.5% (45.2% on adjusted Group result)

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© VERBUND AG, www.verbund.com Page 5

Lower hydro output reduces own generation; declining contract price

Electricity supply 55,238 GWh (+879 GWh, +1.6%)

• Hydropower: 28,098 GWh (–3,090 GWh, –9.9%)

• Generation from storage power: 4,632 GWh (–359 GWh)

• Thermal Power: 2,259 GWh (+228 GWh, +11.2%)

• CCGT Mellach: 768 GWh (+663 GWh)

• Wind/Solar: 882 GWh (+71 GWh, +8.8%)

• Purchase from third parties: 23,999 (+3,671 GWh)

Hydro coefficient (run-of-river)

Q4

0.86

1.16

Q3

0.80

1.10

Q2

0.931.03

Q1

0.931.03

2015 (0.93)2014 (1.02)

long-termaverage

1 Own production excluding volumes for holders of interests (at cost), wind/solar, volumes resulting from pumping and congestion management

Hedging volumes 1 2015/ TWh

FY 2014: €39.1/MWh

24.2

2.6

34.9

31/3/15

21.5

5.1

35.5

31/12/14

18.6

8.0

36.1

31/12/2015

24.9

35.1

30/9/15

24.8

0.8

35.0

30/6/15

Hedged volumesAchieved contract price

Open volumes


Sale of flexibility products

System volatility in the European grid system increasing due to rapid development of new renewables Use of VERBUND power plants supplying flexible products for congestion management and reducing volatility

Flexibility products:

• Control energy: Permanent balance between generation and consumption necessary to ensure grid stability (primary/secondary/tertiary control energy)

• Congestion management: All measures to prevent/counteract excess load flows

• Grid system services: Provision of energy/capacity for grid losses, disruption management, black-start capability etc.

• Intraday trading: Use of short-term volatility within one day to generate additional profits

• Capacity/cold reserve: Contractual reservation of capacity for grid operators

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Non-recurring effects on P&L in 2015

€m Detail 2015 2014

Grid revenue Reversal of provisions and impairments related to SNT-VO and SNE-VO

40

Personnel expenses Reversal of provisions for thermal restructuring 7

Others 3

EBITDA Total 50 -81

Effects from impairment tests CCGT Mellach and Romania -118

Operating result Total -68 -120

Interest expenses Bond buyback -24

Reversal of impairments Ashta 13

Financial result Total -11 -102

Taxes Effects due to the non-recurring effects above 22

Minorities Effects due to the non-recurring effects above -4

Group result Total -61 -90


Key figures (1)EBITDA/ €m Group result/ €m

Dividend; Payout ratio from Group result/ €; %

2015

0.35

58.5

2014

0.29

79.9

2013

1.0059.9

Payout ratio

Special dividend:0.45

EBITDA margin, EBIT margin/ %

2013 2014 2015

13.8

29.9

13.3

28.1

4.5

39.8

889809 839890

201520142013

1,3011,160

Adjusted

Reported

(45.2% on adj.Group result)

208126

580

216

384

269

201520142013

Adjusted

Reported

Rep. EBIT MargeRep. EBITDA Marge


Key figures (2)

Net debt; Net debt/EBITDA/ €m; x

269

412

579

20142013 2015

Free cash flow (after dividend)/ €m

674718841

201520142013

393

-134

547

201520142013

Operating cash flow/ €m

5.03,706

2.84.1

2014

4,060

2013 2015

3,685

Additions/ €mto tangible assets (without business combination)

Net debt/EBITDA


Financial liabilities• Book value Financial liabilities: €2,646m

Financial ratios• Duration: 4.1 years• Effective interest rate: 3.7% p.a.

• Uncommitted lines of credit: approx. €800m• Syndicated loan: €500m

Interest mix• 80% fixed interest rate• 20% floating interest rate

Currency• 100% EUR

Rating• Standard & Poor’s:

BBB+/watch negative

• Moody’s: Baa1/under review

Financial liabilities

Debt maturity profile/ €m

648

333338

242

727

252298

53

202020192018 >202320232022202120172016

Financial liabilities/ €bn

2015

2.6

20142013

3.63.3


Sensitivities 2016A change of 1% (generation from hydropower/ windpower) or €1/MWh (wholesale price) either way would be reflected as follows in the group result for 2016, other things being equal:

• Greater or less generation from hydropower: +/– €4.5m

• Greater or less generation from windpower: +/– €0.4m

• Wholesale price: +/– €5.0m

Outlook

• Earnings outlook 2016: EBITDA of around €750m and Group result of around €230m based on an average generation from hydropower

Hedging volumes 1 2016/ TWh

1Volumes: Own production excluding volumes for holders of interests (at cost), wind/solar, volumes resulting from pumping and congestion management

62531

65

92750

839

PricesHydro and wind volumes

Adjusted EBITDA

2015

EBITDA 2016E

OthersGrid segment

Flexibility products

Reconciliation to outlook 2016/ €m

17.9

8.0

32.5

30/9/15

11.1

14.8

33.1

30/6/15

8.2

17.7

33.6

31/3/15

6.0

19.8

34.0

31/12/14

2.4

23.4

34.6

31/12/15Achieved contract price Open volumes Hedged volumes


Current developments

Page 12


Thermal restructuring – Update

Thermal portfolio Austria

• Dürnrohr hard coal power plant stopped electricity generation as of 30.4.2015 - final closure activities currently under implementation

• Mellach hard coal power plant will remain in operation to supply district heating to the city of Graz until 2020

• CCGT Mellach

• Court confirmed legal opinion of VERBUND –no obligation to keep CCGT Mellach as reserve plant

• Application for the termination of antitrust behaviourfiled for the gas supply agreement – outcome expected mid 2017

• VERBUND is re-evaluating all options for the Mellachpower plants site, including its sale

Thermal portfolio abroad

• Sale of French CCGTs and exit Sorgenia completed in 2015

Expected results contribution excl. one-offs *

Austria

€m 2014A 2015A 2016E

EBITDA -75 -18 -18

EBIT -79 -23 -19

Group result

-82 -25 -22

* thereof Econgas contract: €–30m / €–24m / €–9m


Cost cutting programme 2013-2015 successfully completed

Page 14

Cost cutting results/ €m

60

40

30

77

30

70

201520142013

Actuals (€177m)

Initial target (€130m)

• Cost cutting programme with savings of €177m completed (+€47m vs. initial target of €130m)

• Gradual reduction of 500 FTEs until 2020 by means of partial retirement, package offers and natural churn without replacement

• Immediate reduction of cost of maintenance and operations via strictly prioritized asset management and maintenance strategy

• Immediate reduction of other operating expenses via zero base budgeting and tight cost control processes

• Strict review of our project portfolio will further reduce the cost of feasibility studies


CAPEX plan 2016–2018

Page 15

92135 156

38

94

3514

96

2018

253

2017

236

2016

144

Others

Grid

Hydropower

Growth capex/ €m (total of €632m)

52 60 48

94 8882

2018

131

1

2017

149

1

2016

147

1

Grid

Hydro

Thermal

Maintenance capex/ €m (total of €427m)


Appendix

Page 16


Income statement (continuing and discontinued business)

Page 17

€m 2014 2014 2014 2015

continuing discontinued Total Total

Revenue 2,871.1 9.3 2,880.4 2,969.6Electricity revenue 2,418.1 9.3 2,427.4 2,336.4Grid revenue 351.4 0.0 351.4 439.6Other revenue 101.6 0.0 101.6 193.6

Other operating income 55.7 0.1 55.7 70.5Expenses for electricity purchases & use of fuels -1,466.2 -11.6 -1,477.8 -1,554.5Other operating & personnel expenses -599.7 -42.1 -641.9 -597.1Depreciation & amortisation -392.9 0.0 -392.9 -360.0Effects from impairment tests -55.9 16.9 -39.1 -118.0EBIT 411.9 -27.5 384.4 410.6Result from equity interests & oth. interests 30.1 0.0 30.1 34.2Interest income/expense -159.4 -79.4 -238.9 -152.6Other financial result -15.5 0.6 -15.0 -1.7Effects from impairment tests -13,3 0.0 -13.3 13.3Financial result -158.1 -78.8 -237.0 -106.8Taxes -98.3 131.4 33.1 -53.5Group result 101.1 25.1 126.1 207.7Minorities 54.4 0.0 54.4 42.6Earnings per share (€) 0.29 0.36 0.60(Proposed) dividend per share (€) 0.29 0.35Payout ratio from Group result 79.9 58.5


Non-recurring effects influence EBITDA in €m

Page 18

839

7

40

889

EBITDA adjusted

Reversal of provisions for thermal restructuring

Reversal of provisions for SNT-VO, SNE-VO

EBITDA reported

Others 3


Non-recurring effects influence Group result in €m

Page 19

84

30

18

269

208

Impairment CCGT Mellach

Group result reported

Bond buyback

Reversal of provisions for thermal restructuring 5

Reversal of provisions for SNT-VO, SNE-VO

Reversal of impairment Albania 11

Impairment Romania 5

Group result adjusted


Balance sheet (short version)

Page 20

€m 2014 2015 Change

Non-current assets 11.167 11.085 -1%

Current assets 1.071 678 -37%

Non-current assets held for sale 10 0 -100%

Total assets 12.247 11.763 -4%

Equity 5.281 5.433 3%

Non-current liabilities 5.394 5.350 -1%

Current liabilities 1.573 980 -38%

Total liabilities 12.247 11.763 -4%


Cash flow statement (short version)

Page 21

€m 2014 2015 Change

Cash flow from operating activities 718 674 -6%

Cash flow from investing activities 18 79 –

Cash flow from financing activities -777 -766 -2%

Change in cash and cash equivalents -41 -13 -69%

Cash and cash equivalents at the end of the period

42 29 -31%


Impairments 2015

Page 22

CCGT Mellach

Gas exposure Renewables

* Additions, disposals, reclassifications or depreciations

34Book value 31/12/

∆* 3

Impairment 113

Book value 1/1/ 149

Wind farms in Romania

Book value 31/12/ 168

∆* 9

Impairment 5

Book value 1/1/ 182

Energie AG

87

4

83

Impairment

Book value 31/12/

∆*

Book value 1/1/

Interests


Non-recurring effects on P&L in 2014

€m Detail 2014

Other operating expenses Expenses for gas -27

Personnel expenses Provision for social expenses -22

Fuel expenses Provision for district heating -19

Others -13

EBITDA Total -81

Effects from impairment tests Thermal & hydro power plants and renewables -39

Operating result Total -120

Interest expenses Breakage costs -69

Effects from impairment tests Ashta, Energie AG -13

Others -20

Financial result Total -102

Taxes Tax effect from sale of French CCGTs 121Minorities 11

Group result Total -90


Investor relations team

Andreas WolleinHead of Group Finance and Investor RelationsT +43(0)503 [email protected]

Martin WeiklInvestor Relations ManagerT +43(0)503 [email protected]

Stefan WallnerInvestor Relations ManagerT +43(0)503 [email protected]

Page 24

Documents

© VERBUND AG, · disruption management, black-start capability etc. • Intraday trading : Use of short-term volatility within one day to generate additional profits • Capacity/cold